Employment Agreement - Silicon Graphics Inc.
SILICON GRAPHICS, INC.
2011 North Shoreline Boulevard
Mountain View, CA 94043-1389
November 14, 1997
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mountain View, California 94043-1389
Dear:
Silicon Graphics, Inc. (the "Company") considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the
Company (the "Board") desires to provide additional financial security and
benefits to its key management personnel in the event of certain terminations
of employment.
In order to induce you to remain in the employ of the Company and in
consideration of your obligations under Paragraph 4 hereof, the Company agrees
that you shall receive the benefits set forth in this agreement ("Agreement")
under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect until the earlier of (i) the date that all
obligations of the parties hereunder have been satisfied, or (ii) midnight,
December 31, 1999, unless sooner terminated by written agreement of the Company
and you.
2. DEFINITIONS. As used in this Agreement:
(a) "Cause" shall mean the occurrence of one or more of the
following:
(i) your willful and continued failure to substantially
perform your duties with the Company (other than such failure resulting from
your incapacity due to physical or mental illness) after which there is
delivered to you by the Company's chief executive officer a written demand
for substantial performance which sets forth in detail the specific respects
in which it believes you have not substantially performed your duties;
(ii) your willfully engaging in gross misconduct which is
materially and demonstrably injurious to the Company;
(iii) your committing a felony or an act of fraud against
the Company or its affiliates; or
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(iv) your breaching materially the terms of your employee
confidentiality and proprietary information agreement with the Company.
No act, or failure to act, by you shall be considered "willful" if done,
or omitted to be done, by you in good faith and in your reasonable belief
that your act or omission was in the best interests of the Company and/or
required by applicable law.
(b) "Consulting Period" shall mean the twelve (12) month period
following a termination of your employment with the Company under
circumstances that entitle you to Termination Payments under Paragraph 3.
(c) "Current Compensation" shall mean your monthly base salary, as
in effect immediately prior to your termination of employment with the
Company. In addition, if you participate in a variable compensation program
(other than the corporate annual executive incentive plan or a similar
incentive plan in which all senior executives participate), then your Current
Compensation will be based on your target compensation (including base and
variable compensation) in effect under that plan during the six (6) months
immediately preceding the month in which your termination occurs.
(d) "Disability" shall mean a physical or mental illness or injury
which, as determined by the Company, continuously prevents you from
performing your duties with the Company for a period of six months prior to
termination.
(e) "Employment Continuation Agreement" shall mean the amended and
restated employment continuation agreement dated as of November 14, 1997
between you and the Company.
(f) "Good Reason" for your voluntary resignation from the Company
shall mean your resignation as a result of and within thirty (30) days
following the assignment to you of duties or responsibilities that are
inconsistent with the role of a senior executive of the Company.
(g) "Termination Payment" shall mean the termination pay to which
you may become entitled upon termination of your employment as provided in
Paragraph 3 hereof.
3. TERMINATION BENEFITS.
(a) TERMINATION FOR GOOD REASON; TERMINATION WITHOUT CAUSE. If,
on or before December 31, 1999, you terminate your employment with the
Company for Good Reason, or the Company terminates your employment other than
for Cause, you shall be entitled to termination benefits as provided below;
provided, however, that this agreement will terminate upon the occurrence of
a Change in Control as defined in the Employment Continuation Agreement and
you will not be entitled to termination or other
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benefits under this Agreement thereafter.
(i) TERMINATION ON OR BEFORE DECEMBER 31, 1998. If such
termination occurs on or before December 31, 1998, you shall be entitled to
receive (A) a lump sum termination payment, within ten (10) business days of
the date of your termination, in an amount equal to twelve (12) months of
your Current Compensation, and (B) so long as you do not breach your
obligations under Paragraphs 4, 5 and 6, continuing payments during the
Consulting Period in an amount equal to your Current Compensation.
(ii) TERMINATION AFTER DECEMBER 31, 1998. If such termination
occurs after December 31, 1998 (but on or before December 31, 1999), you
shall be entitled to receive continuing payments during the Consulting Period
in an amount equal to your Current Compensation.
(iii) CONSULTING PERIOD; TERMINATION PAYMENTS. Following
such termination, (A) the Company shall retain you as a consultant during the
Consulting Period, and (B) you shall make yourself available for up to ten
(10) hours per month during the Consulting Period as reasonably requested by
the Company. Nothing in this Agreement shall be construed to prohibit you
from accepting full-time empoyment with another employer during the
Consulting Period, subject to your obligations under Paragraphs 4, 5 and 6.
(iv) OPTIONS AND RESTRICTED STOCK VESTING. All restricted
stock granted to you by the Company shall continue to be released from the
Company's repurchase right (at the rate provided in your applicable
restricted stock purchase agreement) during the Consulting Period. All
outstanding stock options granted to you by the Company prior to the date of
this Agreement with an exercise price higher than the per share fair market
value of the Common Stock on (A) the date of this Agreement or (B) the
effective date of your termination (whichever is lower), and all stock
options granted to you on or after the date of this Agreement, shall remain
outstanding and continue vesting (at their normal rate provided in your
applicable stock option agreement) during the Consulting Period. All other
stock options held by you will be unaffected by the terms of this Agreement.
You are advised that as a result of the conversion of your status from
employee to consultant, any incentive stock options will become non-statutory
options, to the extent they are not exercised within ninety (90) days after
the date you cease to be an employee.
Notwithstanding the termination of the Employment Continuation
Agreement upon the termination of your employment, if a Change in Control of
the Company (as defined in the Employment Continuation Agreement) occurs
during the Consulting Period, you shall have the rights provided under
Section 3(b) of the Employment Continuation Agreement with respect to your
then outstanding stock options and restricted stock awards to the extent that
such rights could have been exercised by you if the Employment Continuation
Agreement had been in effect at the time of the
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Change in Control.
In the event that the terms of this Agreement relating to
restricted stock and options conflict with the terms of any restricted stock
purchase, option or related agreement between you and the Company, the terms
that are more favorable to you will control.
(v) COBRA CONTINUATION COVERAGE. The Company agrees to pay
directly or reimburse you for the amount of your premium payments for group
health, dental and vision coverage elected by you pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA");
provided, however, that you shall be solely responsible for all matters
relating to your continuation of coverage pursuant to COBRA, including,
without limitation, your election of such coverage and your timely payment of
premiums. The Company will pay or reimburse your COBRA premium payments
pursuant to this Paragraph 3(a)(v) until the earlier of (A) the termination
of the Consulting Period, or (B) the date that you and your covered
dependents become covered under another employer's group health plan
providing benefits and levels of coverage comparable to that of the Company.
(vi) EXECUTIVE PERQUISITE PROGRAM. The Company agrees to pay
or reimburse you for expenses (other than automobile allowance and cellular
telephone charges) in accordance with the Company's executive perquisite
program until the earlier of (A) the termination of the Consulting Period or
(B) the date at which you accept full-time employment with another employer.
(vii) OTHER BENEFITS. In addition to the Termination
Payments and other benefits payable pursuant to Paragraph 3, you shall be
entitled to receive all benefits as may then be established under the
Company's then existing benefits plans and policies at the time of such
termination.
(b) VOLUNTARY RESIGNATION; TERMINATION FOR CAUSE. If you
voluntarily resign from the Company (other than for Good Reason), or if the
Company terminates your employment for Cause, then you shall not be entitled
to receive termination or other benefits under this Agreement. In such case,
you shall only be entitled to such benefits (if any) as may then be
established under the Company's then existing benefits plans and policies at
the time of such termination.
(c) DISABILITY; DEATH. If the Company terminates your employment
as a result of your Disability, or your employment is terminated due to your
death, then you shall not be entitled to receive termination or other
benefits under this Agreement. In such case, you shall only be entitled to
receive such benefits (if any) as may then be established under the Company's
then existing benefits plans and policies at the time of your Disability or
death.
4. NONSOLICITATION. You agree that during the twelve months following
any
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termination of your employment with the Company for any or no reason that you
shall not, directly or indirectly solicit or influence any person in the
employment of the Company or any affiliated entity to (i) terminate such
employment, (ii) accept employment, or enter into any consulting arrangement,
with any entity other than the Company or any affiliated entity or (iii)
interfere with the customers, suppliers, clients or business of the Company
or any affiliated entity in any manner.
5. CONFIDENTIAL INFORMATION. You acknowledge that, because of your
position with the Company, you have specific knowledge of many types of
information that are confidential and proprietary to the Company and its
affiliated entities, including, without limitation, its current and planned
technology; its current and planned sales, marketing, and corporate
strategies; strategic customer and business partners; and the organizational
structure, identity, skills and interests of its employees. You agree to
continue to maintain the confidentiality of all confidential and proprietary
information of the Company pursuant to, and will continue to comply with all
terms and conditions of, the Proprietary Information and Invention Agreement
between you and the Company. Such obligations shall survive any termination
of your employment or consulting relationship or of this agreement.
6. COOPERATION. In the event your employment with the Company
terminates, you further agree, upon the Company or its agent's request and
reasonable notice, to cooperate with the Company in connection with any claim
or litigation or other matter about which you may have relevant information.
Upon request, you will also provide the Company with information that you
obtained from your employment with the Company regarding its business or
operations. Additionally, you will immediately notify the Company's General
Counsel if you receive any written or oral request for information from any
persons (other than your full-time employer), or their counsel, who are
asserting or investigating claims or litigation asserted against, or
otherwise adverse to, the Company. You will not disclose information to such
persons except as required by legal process. You will not disclose to
anyone, except the Company, confidential or privileged matters obtained from
or related to your employment with the Company, except as required by law.
7. AT-WILL EMPLOYMENT. You acknowledge that your employment is and
shall continue to be at-will, as defined under applicable law. If your
employment terminates for any reason, you shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Agreement, the Employment Continuation Agreement or as may otherwise be
established under the Company's then existing benefits plans and policies at
the time of your termination.
8. DISPUTES. To dispute a termination for Good Reason by you, the
Company must give you written notice of such dispute within ten working days
after your effective date of termination. To dispute a termination by the
Company or any failure to make payments claimed to be due hereunder, you must
give written notice of such dispute to the Company within 30 days after
receiving a notice of termination, or within 30 days
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after the date on which a payment claimed by you to be due hereunder was due
to be made, as the case may be.
In the event of any dispute, claim, question, or disagreement arising
out of or relating to this agreement or the breach thereof, the parties
hereto agree to first use their best efforts to settle such matters in an
amicable manner. Initially, they shall consult and negotiate with each
other, in good faith and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties. If they do
not reach such resolution within a period of sixty (60) days, then upon
written notice by either party to the other, any unresolved dispute, claim or
differences shall be submitted to confidential mediation by a mutually agreed
upon mediator. Either party may, without inconsistency with this agreement,
apply to any court having jurisdiction hereof and seek injunctive relief so
as to maintain the status quo until such time as the mediation is concluded
or the controversy is otherwise resolved. The site of the mediation shall be
in the County of Santa Clara, California. Each party shall each bear its own
costs and expenses and an equal share of the mediators' and any similar
administrative fees.
If any such dispute is finally determined in your favor, the Company
shall reimburse all reasonable fees and expenses, including attorneys' and
consultants' fees, that you incur in good faith in connection therewith.
9. NO MITIGATION. You shall not be required to mitigate the amount of
any payment or benefit provided for in Paragraph 3 hereof by seeking other
employment or otherwise, nor shall the amount of such payment or benefit be
reduced by reason of compensation or other income you receive for services
rendered after your termination of employment with the Company.
10. COMPANY'S SUCCESSORS. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company, to expressly assume and agree to perform the obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. As used in this
Paragraph 10, "Company" includes any successor to its business or assets as
aforesaid which executes and delivers this Agreement or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
11. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or five (5) days after deposit with postal
authorities transmitted by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth on the first or last page of this Agreement, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only
upon receipt.
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12. AMENDMENT OR WAIVER. No provisions of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing by you and the Company. No waiver of
either party at any time of the breach of, or lack of compliance with, any
conditions or provisions of this Agreement shall be deemed a waiver of other
provisions or conditions hereof.
13. SOLE AGREEMENT. This Agreement and the Employment Continuation
Agreement represent the entire agreement between you and the Company with
respect to the matters set forth herein. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter of
this Agreement or the Employment Continuation Agreement will be made by
either party which are not set forth expressly herein.
14. EMPLOYEE'S SUCCESSORS. This Agreement shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
you should die while any amounts are still payable to you hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisee, legatee, or other designee or,
if there be no such designees, to your estate.
15. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. APPLICABLE LAW. This Agreement shall be interpreted and enforced
in accordance with the laws of the State of California.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
If the foregoing conforms with our understanding, please indicate your
agreement to the terms hereof by signing where indicated below and returning
one copy of this Agreement to the undersigned.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth above.
Very truly yours,
SILICON GRAPHICS, INC.
By: __________________________________
William M. Kelly
Senior Vice President
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:
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